Background: Companies are facing a trend where employees switch from one organization to another.  The generational cohort called Generation Y is less loyal to organizations than previous generations and is said to make up 50 percent of the workforce by 2020. Employee turnover is harmful for organizations, and especially turnover of talents. Turnover of talents means losing high potential and high performing employees suitable for key positions, which have significant influence on the organization’s sustainable competitive advantage. Moreover, it is particularly important for knowledge-intensive SMEs to retain their talents, since they depend on their key employees. Our literature review on retaining talented Generation Ys suggests advancement/development, employer branding, work-life balance and contingent rewards to be primary retention factors for talented Generation Ys. SMEs face unique challenges in providing these. Consequently, it is important to explore how these factors affect the retention of talented Generation Ys in knowledge-intensive SMEs.

Purpose: The purpose of this study is to explore the factors that affect the retention of talented Generation Ys in knowledge-intensive SMEs.

Method: In order to fulfill the purpose of this study, a qualitative approach in the form of a multiple case study has been conducted. The study consists of two knowledge-intensive SMEs where the empirical data has been collected by ten in-depth semi-structured interviews. The data has been analyzed deductively. The deductive approach was chosen in order to explore if, why and how the primary retention factors found in the literature are retention factors in practice as well. A synthesized conceptual model has been made and has been empirically explored.

Findings: The findings suggest advancement/development, employer branding and work-life balance as retention factors, which both support and challenge the synthesized conceptual model and hence previous research. Thus, the model is revised accordingly. In addition, the findings acknowledge additional retention factors (co-workers, go-ahead spirit, responsiveness and work tasks), which have not been primary in literature.